Anaheim City Council votes 3-2 to extend gate-tax ban for Disneyland for 30 years

The Orange County Register | July 7, 2015

ANAHEIM — The Walt Disney Co. early Wednesday was granted a 30-year ban on ticket taxes charged to visitors of Disneyland and Disney California Adventure in exchange for the company’s pledge to spend at least $1 billion on new attractions and a 5,000-space parking structure.

After 5 1/2 hours of public comments and debate, the City Council voted 3-2 just after 1 a.m. to approve the deal, which requires Disney to begin construction by the end of 2017 and complete the theme park expansion within seven years.

If Disney doesn’t hit the deadline or meet the spending threshold, the city’s tax-ban on admission tickets expires. However, the ticket-tax ban could be extended another 15 years if Disney later embarks on a separate $500 million project.

“What we’re talking about is that next generation of economic growth for the city of Anaheim,” Councilwoman Kris Murray said. “I think this will be remembered as a hallmark opportunity for economic development.”

After failing to persuade his council colleagues to delay a decision, Mayor Tom Tait said that he voted against the plan because it “ties the hands” of future voters to enact a ticket-tax on Disneyland if Anaheim faces a financial downturn.

“This just shouldn’t happen,” Tait said. “I think, down the road, people will rue this day. Other people will look at us and say that we gave away the people’s right to vote” for a gate tax.

Councilman James Vanderbilt also voted against the plan.

The council’s move will extend a current entertainment tax exemption for Disney that started in 1996 and expires June 30, 2016. No Disney park in the world currently has an admission tax. However, if a future council or Anaheim voters adopt such a tax, then the amount would be refunded to Disney, essentially negating the charge.

Disney officials said they are still considering potential rides, themed lands and other details for the expansion, which may bank off the company’s newly acquired “Star Wars,” Marvel and Pixar franchises.

Disney has about 28,000 workers in Anaheim, making it the largest employer in Orange County. When completed, the project promises to create 1,400 new jobs at Disneyland Resort and create an additional $15 million in annual tax revenue to the city, according to a Disney-commissioned report completed by KPMG, an auditing firm.

Disney paid $56 million in property, sales and hotel-room taxes last year to the city, making up more than one-third of all taxes generated in Anaheim’s resort district, city and company officials said.

“We applaud Anaheim’s leaders for their continued foresight in ensuring the city remains a vibrant tourism destination by extending a proven policy that has created two decades of unprecedented economic and job growth,” Michael Colglazier, president of Disneyland Resort, said in a statement after the City Council’s vote.

“We are excited about what the future holds for Anaheim and the Disneyland Resort as we work together to ensure our city continues to thrive and grow,” Colglazier said.

Representatives from the Angels, business organizations, trade unions and nonprofit groups supported the plan. Opponents included several community activists and Latino residents who said Anaheim’s low-income neighborhoods do not see the economic benefits created by Disneyland’s presence in Anaheim.

Activist Joanne Sosa suggested that the council include a provision that Disney does not contribute money to future City Council candidates .

Last year, Disney gave the maximum $1,900 to all the incumbents running in Anaheim’s city elections. Disney gave an additional $776,000 to four political action committees whose campaign spending included a combined $476,000 to help Murray and former Councilwoman Gail Eastman.

“It appears to me that Disney is averting the people’s right to vote,” said Gretchen Shoemaker, owner of Georgia’s Restaurant in the Anaheim Packing House.

“Disney is walking with a good deal,” Shoemaker said. “This is not right.”

Our earlier coverage from Tuesday night:

ANAHEIM – The City Council debated late into Tuesday night over whether to extend a gate tax ban at Disneyland and Disney California Adventure for three decades in exchange for $1 billion worth of improvements into the theme parks proposed by The Walt Disney Co.

A decision was not yet reached by 10 p.m. amid a lengthy public hearing on whether to extend the current entertainment tax exemption for Disney that started in 1996 and expires June 30, 2016.

Last week, three council members – a majority – said they planned to support the plan. Mayor Tom Tait said he would be opposed, while Councilman James Vanderbilt said that he was undecided prior to the council meeting.

“What we are trying to determine right now is the scale of our next investment, as well as the viability of Anaheim for future expansions relative to other Disney parks around the world,” Michael Colglazier, president of Disneyland Resort, told the City Council.

“It is critically important to understand that the impact of this policy will go well beyond the next big attraction, as Anaheim would be the only Disney park with a target, local tax and this would impact the return on any investment in Anaheim, now and in the future,” Colglazier said.

More than 70 people submitted cards to speak during the hearing, while an overflow crowd packed the council chamber and lobby of Anaheim City Hall.

Anaheim resident Mark Daniels told the City Council that an option to impose a ticket tax shouldn’t be taken off the table because it’s unknown how the city’s finances will unfold in the future.

“I would like to see this thing shelved and pulled off the table until people are informed,” Daniels said. “Let’s take time to look at this.”

The plan was supported by representatives from the Angels, the Orange County Hispanic Chamber of Commerce, the Orange County Business Council, trade unions, the county’s Lincoln Club; Visit Anaheim, the city’s visitor and convention bureau; and several nonprofits.

Opponents included several Latino residents who said that Anaheim’s low-income neighborhoods do not see the economic benefits created by Disneyland’s presence in Anaheim.

“Please let’s step back,” said Jose Moreno, a local Latino activist and former president of the Anaheim City school board.

“Let’s not get the same deal because we’re in a different economic context,” Moreno said. “Disney doesn’t pay a living wage in Anaheim.”

Former State Sen. Lou Correa said that he was “dumbfounded that an issue like this could create such controversy,” adding that an expansion of the Disney theme parks would create jobs.

The first phase of Disney’s planned expansion would create more than 10,000 construction jobs and generate $17.9 million in sales, property and hotel-bed tax revenue, said economist Jordan Levine of Beacon Economics, who was hired by the city.

Disney has about 28,000 workers in Anaheim, making it the largest employer in Orange County. When completed, the project promises to create 1,400 new jobs at Disneyland Resort and create an additional $15 million in annual tax revenue to the city, according to a Disney-commissioned report completed by KPMG, an auditing firm.

Disney officials have not yet announced potential rides, themed lands or other details of the planned theme park expansion.

No Disney park in the world currently has an admission tax. Disney officials have said that a gate tax would hurt attendance, guest spending and the company’s ability to “significantly invest” in the theme parks.

Under the proposal, should a future council or Anaheim voters adopt such a tax, then the amount would be refunded to Disney, essentially negating the charge.

Al Jabbar, a member of the Anaheim Union High School District’s Board of Education, said that Disney should make a multi-million dollar donation to visual arts programs for Anaheim campuses as a condition to approve the ticket-tax ban.

“You are in a better position to negotiate,” Jabbar told the council. “We’re not asking Disney to be our city’s ATM machine, but a responsible corporate partner.”